Apple Fined by Australian Court for Misleading 4G

Following action taken by the Australian Competition and Consumer Commission, the Federal Court has ordered Apple to pay AU$2.25 million in civil pecuniary penalties for misleading advertising in relation to the promotion of its “iPad with WiFi + 4G” which has been found to have contravened the Australian Consumer Law.

Apple promoted the “iPad with WiFi + 4G” in Australia from 8 March to 12 May 2012 on its website, its online store and in its retail store. Apple resellers also promoted the “iPad with WiFi + 4G” online and in their stores using promotional materials supplied by Apple.

However, the “iPad with WiFi + 4G” could not connect to any networks which have been promoted in Australia as 4G networks, in particular Telstra’s LTE network.

“The $2.25 million penalty reflects the seriousness of a company the size of Apple refusing to change its advertising when it has been put on notice that it is likely to be misleading consumers,” ACCC Chairman Rod Sims said.

“The Federal Court has again recognized the need to protect consumers from misleading advertising in the telecommunications and related sectors. This decision should act as a renewed warning that the ACCC will continue to take action against traders who take risks in their advertising, regardless of their size.”

In his reasons for judgment, Justice Bromberg considered that Apple’s conduct was “serious and unacceptable” and stated that “The most concerning aspect of Apple’s contravention… is the deliberate nature of its conduct”.

Justice Bromberg noted that the facts of the case suggest that “global uniformity was given a greater priority than the need to ensure compliance with the ACL”. His Honour warned that “Those who design global campaigns, and those in Australia who adopt them, need to be attuned to the understandings and perceptions of Australian consumers”.

The Court declared that Apple’s conduct was liable to mislead the public as to the characteristics of the device in contravention of section 33 of the Australian Consumer Law. Apple agreed to the declaration and consented to the penalties and other orders sought from the Court.

This judgment follows an undertaking given by Apple to the Court on 28 March 2012 in response to the ACCC’s decision to institute proceedings.

Apple was also ordered to pay a contribution to the ACCC costs in the amount of $300,000.

The ACCC welcomes the Court orders and notes that this decision is the fifth penalty handed down over $1 million since civil pecuniary penalties for consumer protection matters were introduced.

The ACCC has been required to take legal action against a number of large corporate entities to ensure advertising and promotions do not mislead consumers. Since the introduction of the Australian Consumer Law the Court has imposed penalties of in excess of $1 million on Optus, Harvey Norman and TPG for similarly problematic conduct.